Numerous have actually feared that the precious metals will at first fall with stocks but this seems unlikely to be the case …
Here is a joint statement from Lagarde and Powell at a secret G7 conference with all Leaders and Finance Chiefs of the 7 countries participating in as well as the IMF and BIS:
” The financial system has actually been on the edge of collapse because September 2019 when we began Repos and QE.
We had enough problems saving the banks.
Fortunately we have printing presses and that assists to keep it all going however only simply.
EXPONENTIALLY WORSE THAN 2008– A GREAT VOID
And this dear readers is where the world stands today.
All that is needed is an extreme 2nd wave of CV-19 or a bank collapse, triggering an implosion of financial obligation markets and the whole system.
Yes, we know the world remained in a similar scenario in 2008 but with over $100 trillion more in financial obligation and who understands the number of additional $100 s of trillions of derivatives plus a world economy breaking down– it is now significantly even worse from a danger perspective.
We should also remember that bad debts in the monetary system are going up by the minute with most borrowers under severe monetary pressure.
TELLING THE REALITY IS An ADVANCED ACT
So why do not the Fed and ECB chiefs inform the truth? Well, possibly they are, in their own CB Speak.
ECB President Christine Lagarde said the healing from the coronavirus pandemic will be ” restrained” and will alter parts of the economy permanently. And Powell recently said: “The course ahead is most likely to be tough Lives and incomes have been lost, and unpredictability looms large.”
So “restrained” and “challenging” is as far as they can extend without stressing the world. They would clearly never warn bank depositors that their money will soon be gone. This is why individuals must figure it out themselves. They will not of course until it is too late.
LESSONS IN RISK
Many people have never had to fret about danger in the financial system since until now they have been conserved by the CBs.
With more than 50 years in business you discover a lot of lessons en route. As a boy, when obtaining my MBA back in 1969 I had to find out everything about Keynesian economics, just understanding much later how incorrect it all was.
My very first job was in business financing in a Swiss Bank.
My genuine grounding in dealing with risk was at Dixons. At the time it was a little listed UK business which we developed to the UK’s leading consumer electronics merchant and a FTSE 100 business. I was initially a green 29 year old Financing Director and a couple of years later Executive Vice-Chairman. Dixons was founded by a Jewish entrepreneur who was an excellent business person and retailer. It was a steep learning curve. He is now 88 and still as sharp as ever.
One of our concepts was to constantly panic early but in a regulated way For example, if there was a substantial recession in customer costs, we implemented significant cost decreases throughout the company within a couple of days. And if we made significant acquisitions, we rapidly sold dead or liquid properties to minimize leverage to conservative levels.
By being economically prudent and commercially aggressive, we managed to grow the company quick without taking excessive risks.
Low leverage and low debt were the secret So, really various to today with massive debts and take advantage of. And that is why no individual and no business can survive a severe crisis without huge state help. In current times, nobody has been taught to save or build up a savings for a rainy day. When things go well, all the money is invested and when they go terribly, you either obtain cash or the state has to assist. This chooses people along with for huge corporations.
FINANCIAL OBLIGATIONS AND DEFICITS– THE MODERN MANTRA OF FINANCE
With low or zero interest rates and the value of cash continuously decreasing, there is plainly no reward to conserve whatsoever. Likewise, federal governments and central banks are setting really poor examples.
But how can you anticipate individuals to be sensible when their governments and central banks have for years been running deficits and printing money. Financial obligations and deficits are the mantra of modern-day financing. However what nobody appears to comprehend is that this mantra has become a persistent disease which is killing the world a lot faster than the coronavirus.
WEIMAR & ZIMBABWE SQUARED IS COMING
The world’s main banks are now in the process of outshining both Weimar and Zimbabwe.
We discuss billions, trillions and quadrillions as if we comprehended what it means however no one actually does. It is definitely difficult to fathom what a trillion is. Let’s start by counting to one trillion. It will take you 32,000 years. And then you would need to count really quick, never ever hesitate nor make a mistake– nor begin with the beginning once again. Ok, so the $18 T just created internationally, the length of time would that take? Almost 600,000 year s.
FED & ECB QE HAS ZERO VALUE
So clearly absolutely unrealistic and impossible. Whenever this magnitude of cash has been produced before, like Weimar, it has actually constantly been absolutely worthless. And it is this time too!
This magnitude of financial obligation can never ever be serviced at a market rate. Only at near No or negative rates. It can never ever be paid back with correctly made money. $18 T represents 22% of International GDP. And given that almost all countries have deficits today, there is definitely NO possibility that this debt will ever be serviced or paid back in future. Keep in mind that the United States has actually not had an appropriate budget plan surplus since1960 (Please do not write to me about the Clinton years. They were fake surpluses as financial obligation continued to increase).
Virtually all the cash produced by the US government and the Fed in the last 20 years is completely worthless. Since any cash created at will out of thin air is by definition fake. If all that was required to print the $10 s of trillions was to press a button and nothing was produced by method of products or services, then the money has NO worth.
I know I keep stressing the previous point over and over once again. This is done so that a minimum of a few individuals can comprehend what is most likely to take place next and for that reason prepare themselves and their financial situation.
So why don’t Powell and Lagarde inform individuals that reserve bank actions are damaging the economy and the worth of the nation’s cash.
The dollar has lost 86% in this century and the Euro 82%, determined in genuine money. Genuine cash is naturally gold since it represents consistent purchasing power and is the only money which has actually survived in history.
THE JOURNEY TO ZERO WON’T BE LONG!
There is a threatening detach in between equity worths and revenues.
The Dow correction up ended up on May 8 and is now resuming the downtrend. All the V healing optimists are going to get a genuine shock. The month-to-month Dow peaked in January 2020, see chart, and the downtrend was verified well prior to CV started to difficulty markets.
I have actually been stating in the last couple of weeks that a resumption of the stock market drop impends and it appears clear that impending is now. The majority of market individuals will be shocked as stocks worldwide crash down listed below the March lows and long term much, much lower.
Gold & Silver
Many have actually feared that the precious metals will initially fall with stocks however this appears not likely to be the case.
There has actually been a massive battle to hold Silver listed below the $18 level. It appears the LBMA young boys are now losing the battle as silver has actually gone through the $18 level which it has actually held below since 2014 with 3 months’ exception in2016 This Silver Maginot Line is a lot more significant than the Gold one as it comes from a much lower level of 64% below the $50 peak. As soon as through, we are likely to see a silver surge and a sharp fall in the gold/silver ratio.
Praeterea censeo Carthaginem esse delendam– Cato the Elder
3rd Punic War 149– 146 BC
” Moreover I consider that Carthage needs to be damaged” is what Cato the Elder stated at the end of every speech he gave up the Roman Senate previous to the 3 rd Punic war 149-146 BC. In the end his determination settled and Carthage a Phoenician City in North Africa was ruined.
I learnt this expression in Latin at school and likewise about Roman history and it has stuck ever since.
The reason I discuss this is that I, like Cato, usually end up most my posts in the very same method, namely that you need to hold gold for wealth preservation functions and not for gains determined in phoney paper money which will be absolutely debased.
Ideally not just my historical understanding of gold but likewise my passion and perseverance will assist a few people to avoid ruin in coming years.
P.S. The secret G7 conference gone over at the start of this short article obviously never happened. However it needs to have!
Egon von Greyerz
Creator and Handling Partner
Matterhorn Property Management
Phone: +4144 213 62 45
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